It is the responsibility of leaders to bring about shifts in behavior by having both a vision of integrity for the organization and a strategic plan for ensuring such integrity. This vision must be articulated in a way that is relevant and actionable by employees. A vision that aims too high will not be taken seriously while one that is too pedestrian will not motivate employees. With the spectacle of court TV to avoid, what should a board of directors use to generate a proper picture? The style (or stance) of leadership the board wants to promote demonstrates a capacity to energize subordinates and the public to believe that the organization has risen above its singular contractual obligations and performs at the level for mutual benefit of civil society and stakeholder.
The principal finding of a McKinsey Quarterly survey of more than 1,000 board members is that having focused for a time on accounting-compliance issues, boards are now determined to play an active role in setting the strategy, assessing the risks, developing the leaders, and monitoring the long-term health of their companies.
At one level, the survey underlines the way the Sarbanes-Oxley Act is holding boards–not only in the United States, but also around the world–more responsible for meeting high standards in reporting and controlling the financial affairs of their companies. Yet the implications for governance are even far more reaching. To achieve as much involvement as directors say they want, they will have to use their time in meetings more effectively and develop a new understanding of their roles and responsibilities; otherwise, they will give management the impression they intend to take on day-to-day roles. Moreover, the composition and culture of boards, as well as the agendas of board meetings, will require fresh thinking.
Understanding and choosing the style of leadership necessary to create the desired environment for the organization begins with understanding the various leadership roles available to organizations today.
Leadership as Management: Developed by Friedrich Taylor, this is a managerial role that asks leaders to ensure group activity is timed, controlled, and predictable. This mind-set says little, if anything, about the leadership task of building shared values, trust, and vision. It is silent about the animating essence of business and business people. By relegating workers to the status of “cogs” in the corporate machine, it has scant appeal to the better educated, more aware, and ever-more-wanting people entering the workplace. The need to be rapidly responsive to changes in customer demand for products and services places a strain on the rigid, procedural, control mechanisms developed by this managerial mind-set — to produce traditional outputs with multiple units of the same product to high tolerances and low margins.
Leadership as Excellent (good) Management: This view of leadership, while maintaining the mechanistic operational inclination of the firm, changes the character of the core follower (responding to the pull of the quality movement) and enlarges the domain of the manager. Essentially it retains the idea that leaders and managers do much the same thing. It limits the scope of leadership to just one function — quality improvements — and ignores the full range of capacities of both leader and follower. It does not address the needs of the corporation beyond a focus on high quality.
Values Leadership: This conception of leadership is rooted in the reality of human nature and conduct. The essential human nature is simple; everyone has values and these values trigger behavior. Even as it recognizes the use and importance of values in shaping behavior, out of a false desire to let each person choose their own values, it refrains from advocating any values or even discussing relative merits of alternative value systems. Indeed, it teaches that any value is equal to any other. So it recognizes that values are shaping our lives but fails to address that we do not know how to consciously set our own values systems or evaluate the merits or results of those we see in others. Values leadership clearly has set aside a space to articulate values but seems too timid and unsure to make full use of the space.
Trust Leadership: This view sees its role not so much as a function of the individual leader but as a condition of the group culture. Leadership may be spontaneous at times. Most often, it is a result of specific, planned actions to create a culture conducive to internal harmony and interpersonal trust. The leader’s task is to build a culture of shared values where people can come to trust each other enough to sublimate their differing values so that they can work together. Those accepting this leadership reality see the need for a unified, effective, harmonious culture characterized by mutual trust that allows leadership to take place. It is a collective activity, shaped and controlled by the values-laden notion of harmony as defined by its history of domination by the majority culture. Without a broad and adroit set of critical skills, the trust leader’s search for unity will tend to exclude many important insights, tactics and especially people. This view is likely to accept conformity as consensus or, even worse; it needs conformity and needs to call it consensus.